Savings and Small Business Healthcare

As Washington debates an overhaul of health care, many small businesses are vehemently opposed to the idea of requiring employers to help pay for their workers’ medical coverage.

But at least one small-business group says the proposals now being considered by the Obama administration and Senate leaders could save small companies tens of billions of dollars a year in health care costs — even if there is a mandate for employer coverage.

An analysis by the group, the nonprofit Small Business Majority, to be released Thursday, concludes that the changes would be better for small employers than continuing the current system, which leaves many of those businesses struggling to afford health benefits for their workers. Half of companies with nine or fewer workers do not currently provide employee coverage.

“Small businesses want to be part of the system,” said John Arensmeyer, the group’s chief executive. “They don’t want to shirk their responsibilities.” But “we need comprehensive reform,” he added. “The entire system needs to be fixed.”

Founded in 2005 by executives of small companies who wanted to broaden the small-business discussion about health reform, the group was among those recently invited to the White House to discuss the issues. Mr. Arensmeyer said any mandatory coverage requirements would have to address the inability of some businesses to pay for the contributions. “This doesn’t work in the short term without some assistance to the smallest and least profitable businesses,” he said.

The analysis, conducted by Jonathan Gruber, an M.I.T. economist who helped advise Massachusetts on its overhaul of health insurance, examines proposals being discussed by the Senate Finance Committee and others in which small companies would have to pay some portion of their payroll toward health benefits but would also receive some form of tax credits to defray the expense.

Small businesses would save in two major ways, Mr. Gruber said. Because small companies traditionally pay much more than large corporations for the same coverage for an employee, they would benefit from proposals streamlining the purchase of insurance and lowering the administrative expenses associated with the policies. The companies, he said, would also benefit from the success of any legislative efforts to contain the rapidly escalating cost of health care.

Over all, the study estimates that the proposals under debate could save small businesses anywhere from $546 billion to $855 billion over the next decade.

If nothing is done, on the other hand, the study says the health care bill for small businesses — estimated at $156 billion this year — would more than double, to $339 billion in 2018.

But some small-business groups still worry that the proposals now being floated could do more harm than good.

The National Federation of Independent Business, an association of small companies, says many of its members do not favor forcing companies to pay a significant share of the cost of employee health coverage.

Susan Eckerly, senior vice president of federal public policy for the federation, said her group was concerned that the proposed measures could fail to contain the high costs of medical care, which she said was a main concern for small businesses.

“Adding new, additional burdens to small-business owners — especially in the form of an expensive mandate — is not an effective approach to reform,” Ms. Eckerly said. “In fact, it burdens the very people we are supposed to be trying to help.”

Reducing overall costs is a critical piece of any proposal, Mr. Arensmeyer agreed. “Nobody wants anyone to pay into a broken system.”